To do business – hire employees, pay taxes, and open bank accounts – you need a Tax Identification Number. A Tax ID Number may be known as a Federal Tax ID, Employer Identification Number, or Federal Employer Identification Number. Regardless of how it is referenced, it is a unique number that represents your business. If you want to apply for an employer identification number quickly (and without any complications), an Online Tax ID application is the best route to take. An Online Tax ID application can be filled out quickly and will return a Federal Tax ID Number (EIN) within an hour.
Steps for Applying for a Tax ID Number
- Prepare Required Information
- Name a Responsible Party
- Apply for your Tax ID Number Online
- Apply for your Tax ID Number via Phone
- Apply for your Tax ID Number via Fax or Mail
- Why do I need a Tax ID Number?
1. Prepare Required Information
Your first step is to collect important information regarding yourself (if you’re applying for your own Tax ID) or the responsible party for your business (if you’re applying for a business Tax ID). The information you will need is:
- The individual’s own Taxpayer Identification Number (ITIN).
- The individual’s contact information, including mailing address.
- The individual’s relationship to the business.
- The company’s structure.
You don’t need a lot of information to acquire a Tax ID Number, but the information will need to be checked for accuracy.
2. Name a Responsible Party
If you’re filing as a sole proprietor for a Tax ID, you will name yourself as the person trying to get a Tax ID Number. Otherwise, you’ll need a single individual who is going to be named the responsible party for the Tax ID.
An EIN Responsible Party is going to be the person who is contacted in the event that there are any issues with the EIN or if further questions need to be answered. The responsible party has to be a stakeholder in the business. This is usually an owner, general partner, or principal officer.
3. Apply for your Tax ID Number Online
Do you need your Tax ID Number fast? Obtaining a Federal EIN online is the best option. When you apply online through a third-party tax ID service, you can get your Tax ID Number in an hour. The tax ID service will collect and verify your information and give you a Tax ID Number that can then be used immediately on official forms and documents, and to file tax returns.
4. Apply for your Tax ID Number via Phone
You can apply for a Tax ID Number via phone if you call in with the relevant information. However, you will need to call in during business hours, and you will need to complete the process from start to finish over the phone. If you get disconnected, you will need to begin the process over again. While getting a Tax ID Number over the phone is possible, it also means you won’t have any written or digital record of your Tax ID Number: it will be verbally given to you over the phone. Getting a Tax ID Number over the phone will take longer than getting a Tax ID Number online.
5. Apply for your Tax ID Number via Fax or Mail
If you have the time, you can theoretically apply for your Tax ID Number through either fax or mail. Both of these processes will take longer than the online process and are generally not advised.
To get a Tax ID Number through fax, you will need to fax in your application and wait for your Tax ID Number to be returned. This is a process that could take days. The fax process can be unpredictable, as fax machines are a fairly old technology and they don’t always return errors if messages aren’t received. If your fax machine disconnects or fails to operate correctly, you may never receive your Tax ID Number even though a Tax ID Number has been assigned. The fax process should take three to four days – but if an error occurs on the application, you may need to start again.
To get a Tax ID Number through mail, you need to mail in your application instead of faxing it. A Tax ID Number will be returned to you in up to six weeks. Understandably, most people cannot wait this long for their Tax ID Number, which is why this is the least efficient method of applying for a Tax ID Number. If your application needs more information, the application will be returned to you within six weeks, but the waiting period will begin again once you send the corrected application in.
Neither fax nor mail are the ideal way of processing a Tax ID application. An online Tax ID application will return a Tax ID in under an hour, making it both faster and more convenient.
6. Why do I need a Tax ID Number?
A Tax ID (EIN) Number is like a social security number for an entity that either does business or hires employees. A Tax ID (EIN) Number is needed if your business files taxes and needs a bank account, plus business loans, permits, and licenses. Without a Tax ID Number, you will be unable to perform basic business tasks, such as filing payroll taxes. A Federal Tax ID Number should not be confused with a State Tax ID Number: one is used for federal taxes and hiring, while the other is used for state-related taxes and documents.
Even a sole proprietorship will need a Tax ID Number to begin hiring and paying employees. While you can pay contractors without a Tax ID Number (such as a gardener or maid), you cannot pay employees without a Tax ID Number. The EIN Number is used on the initial hiring forms, to pay payroll taxes, on end-of-year payroll forms, and on things such as visa applications and worker permits. It is also used to acquire business lines of credit, credit cards, and loans, under the company’s name rather than the business owner’s.
As a Tax ID Number is used for most business tasks, it should be one of the first things that a business acquires. You can get your EIN Number within an hour by filling out an online Tax ID application.
Note that the IRS only issues one EIN per responsible party per day. If you are the responsible party applying for tax ID numbers for multiple organizations, you can only obtain one EIN every 24 hours.